Changes afoot for Foreign Buyers of NZ Real Estate

30 July 2018 by Paul Connolly

The Overseas Investment Amendment Bill which contains an expansive 87 pages was introduced to Parliament on 14 December 2017 and passed its third and final reading on 15 August 2018 and will now pass to the Governor General's consent to become a binding law. The Overseas Investment Amendment Act 2017 will amend the Overseas Investment Act 2005. There is some range in the debate from the Government’s view that the bill will protect a New Zealander's birthright to own a home, to the Real Estate Institute of New Zealand taking a view that the bill will not have any impact on house prices nor will it assist young people into their first homes.

The Act will stop overseas residents from buying most types of existing homes and lifestyle blocks which will now be regarded as sensitive land but new apartments in large developments and multi story blocks will be exempted. Currently sensitive land in New Zealand includes:

rural land that exceeds five hectares;

land that exceeds 0.4 hectares and adjoins certain types of reserve or conservation areas (that also exceeds 0.4 hectares); and

land that exceeds 0.2 hectares and adjoins foreshore.

The definition of ordinarily resident in New Zealand in a transaction involving sensitive land is strengthened and you must qualify in all of the following:

you must hold a residence class visa under the Immigration Act 2009 (this is defined as a permanent resident visa or a resident visa);

been residing in New Zealand for preceding 12 months;

be a tax residence in New Zealand; and

been present in New Zealand for 183 days or more in the preceding 12 months.

It is important that before buying property in New Zealand, and you are not a New Zealand citizen, that you should seek appropriate professional advice. Stace Hammond provides specialist immigration advice through Arran Hunt (arranh@shlaw.co.nz).

The new Act will allow investment in residential sensitive land if the purchaser passes the investor test by satisfying one or more of tests applying to: commitment to reside in New Zealand, the benefit to increase housing, non residential use benefits, and the overall benefit to New Zealand.

The Overseas Investment office may issue a notice requiring the disposal of property if the purchaser of that property has breached the terms of the Overseas Investment Act 2005 and amendments if the Act is contravened, an offence has been committed or a consent condition has not been complied with.

The amendment also addresses other issues including forestry and the Resource Management Act 1991. Ensure you seek proper professional advice as the law will now change.

As a result of trading obligations with Australia and Singapore the new changes to sensitive land requirements do not apply.Stats NZ data showed just over three per cent of houses sold or transferred in the March 2018 quarter went to foreigners. That dropped back to 2.8 per cent by June.